Moody’s upgraded the country’s credit rating outlook from negative to stable, stating Government achievements in curbing debt and igniting economic growth. The institution finds three key factors behind this improvement.

Hungary’s middle-term economic prospects have turned more positive due to the sound fundamentals that underpin economic rebound. The credit rating agency emphasised that indebtedness has been decreasing for years and this trend has amplified the favourable effect of Government measures. The fact that investment and consumption data have been increasingly impressive also signals an encouraging tendency. Moody’s finds that the Government’s commitment to keeping the deficit target below 3 percent is of great importance as this stabilizes the debt rate. In the medium term, the agency is expecting the debt-to-GDP ratio to gradually decline and they welcome the Government effort aimed at strengthening the domestic financing side of the servicing of debt.

The credit rating institution has also acknowledged that the country’s external vulnerability has improved which trend has been reflected in factors such as the multi-year current account surplus, high foreign currency reserves, a favourable external liquidity position and firm forint exchange rate. As the external indebtedness of households, enterprises and banks have substantially diminished over the past years the ratio of the country’s external debt has also declined markedly.

Hungary’s credit rating outlook is seen as stable at all three major international credit rating agencies.

(Ministry for National Economy)